THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

[09:00:00] CHRIS CUOMO, CNN ANCHOR: So she can hire more people just like her.

ALISYN CAMEROTA, CNN ANCHOR: I cannot weigh in on this story until I taste the goods. That is what a good reporter would say. So please send us some cookies. Thank you for that. Time for NEWSROOM with Carol Costello.

CUOMO: Big fan of cinnamon, Carol Costello.

CAMEROTA: Hey, Carol.

CAROL COSTELLO, CNN ANCHOR: I am. I am a fan of cinnamon, I will admit.

CUOMO: There it is. You think I don't know you.

CAMEROTA: There you go. Wow, we got it out of you.

CUOMO: How I know, we'll let the people decide.

COSTELLO: Let the people decide, OK. You're blinking in and out. I can't hardly hear, but you guys have a great day. NEWSROOM starts now.

And good morning, I'm Carol Costello. Thank you so much for joining me.

Out of the shadows and into the spotlight. Minutes from now on Capitol Hill, the nation's top intelligence chiefs expected to testify on their bombshell conclusion that Moscow deployed hackers to meddle in the U.S. election. That conclusion accepted by lawmakers in both parties, but facing new doubts and sharper criticism from their next Commander-in-Chief. President-elect Donald Trump rejecting the findings and vowing to overhaul the intelligence community. Today, some members of his own party are voicing alarm.

PHIL MATTINGLY, CNN CORRESPONDENT: Yes, good morning, Carol. In about a half hour, we're going to see the first public airing since that assessment about Russian malicious activities related to the election was released. The first sustained questioning from Congressional officials of top intelligence officials on Capitol Hill in public.

And this is an important moment, obviously. As you noted, the President-elect making very clear his distrust of this assessment, his distrust of what intelligence officials have told the media, have released publicly, and have told lawmakers behind closed doors.

Now, who is going to be up on the Hill today? Director of National Intelligence, James Clapper, the man who kind of oversees the entire intel apparatus; Marcel Lettre, who is an undersecretary of Defense for Intelligence; and also Mike Rogers who runs U.S. Cyber Command and as an admiral, he also runs the National Security Agency.

Now, it also comes at a very important time for Republicans on Capitol Hill. Now, the man who chairs the committee that will be overseeing this hearing today, John McCain. John McCain has made very clear he believes the intelligence assessment. He has extreme problems, to say the least, with Russian President Vladimir Putin. And he has problems with the way the President-elect has positioned himself on this issue. Also on the committee, Lindsey Graham who has made no bones about it, that he also believes the intelligence community.

But what we haven't seen, really, in spades, at least, over the course of the first couple of days in Congress, while Republican lawmakers are willing to distance themselves in large part away from Russia and away from Vladimir Putin, away from kind of that foreign policy, they're not attacking the President-elect at all. They have a respect for the man who's leading their Party and is going to be in the White House soon.

How those lawmakers react today, Democrats certainly planning to try and put them in difficult positions, and how they react to what the intelligence officials are going to say is going to be a very interesting dynamic to watch as they try and walk that tightrope. As one senior GOP aide -- how they feel about the position they've been put in when it relates to Russia, when it relates to the intelligence community, and as it relates to foreign policy in general -- responded with one word, "Uncomfortable."

COSTELLO: All right. Phil Mattingly reporting live from Capitol Hill this morning. We'll get back to you. Thanks so much.

As James Clapper, the Director of the National Intelligence Agency, testifies on the Russian hack, the President-elect is formulating a plan to limit the agency's power. Trump's team believes Clapper's office has become bloated and politicized. CNN Justice Correspondent Evan Perez has been working his sources this morning.

Evan, take it away.

EVAN PEREZ, CNN JUSTICE CORRESPONDENT: Good morning, Carol. There's a couple of ideas that are driving some of this impetus for change, at least, from the Trump transition team. One is that the idea that the Director of National Intelligence is an office that is interfering in the business of some of the other intelligence agencies that it oversees, that it gets in the way of some of their work.

Now, a lot of that is coming from Mike Flynn, we're told. This is, obviously, the President-elect's right-hand man. He's going to be the Chief of Staff. And one other thing -- I'm sorry, he's going to be the National Security Adviser inside the White House. And he comes from a background of running the Defense Intelligence Agency where he clashed very often with James Clapper, the head of the DNI. So that is part of the story there.

The second part of this is the CIA. And the belief among some in the Trump transition, that the CIA has gotten away from its tradition of human intelligence collection, that it's relying a lot more on the NSA's signals intelligence and electronic spying. So there's some effort to try to bring that back to the way it used to be.

Now, Carol, it should be noted that, you know, this is the kind of thing that happens when administrations change over. They look at the organizations and see if there's any changes that they'd like to make. Back when the Obama administration was taking office, they looked at whether to split the FBI into two separate agencies. After studying the issue, they decided they had to keep it exactly how it was.

[09:05:03] I suspect that we're going to hear a lot of what the Trump transition team is looking at. They're going to run into some realities, including the fact that a lot of these ideas are outdated. That the rivalry with the DNI and intelligence agencies, that's something that frankly is something from five, six years ago, Carol.

COSTELLO: All right. Evan Perez, reporting live for us this morning, thank you. So let's talk about this some more. With me now, Senator Roger Wicker, a Republican lawmaker from Mississippi. He is taking part in today's hearings.

Welcome, sir.

SEN. ROGER WICKER (R), MISSISSIPPI: Glad to be with you.

COSTELLO: Glad to have you here. Senator, what can intelligence officials say today during testimony that will make President-elect Trump believe that Russia is indeed behind the election hack?

WICKER: You know, I really think, in that sense, we need to lower expectations today. I think that conversation may have a better opportunity tomorrow in a classified setting. What this is today, this is a public hearing of three of our intelligence officials.

They'll be able to say what they can say to the entire world, but it may be that, in terms of really digging into what the true facts are, we're going to need to hear this in a closed session. And I know the press doesn't like to hear that, but I don't have much hope for a very full disclosure today.

COSTELLO: So will it be a waste of time? WICKER: No, I don't think so. And I think if we get into the larger

issues of what the threat is, what Russia has done in other countries, what they're capable of doing, I think it can be very informative for the public and for members of the Committee.

But, you know, here is what we know. We know what WikiLeaks said, and we know what the intelligence community has said publicly. We also know that Julian Assange has real credibility problems. We know that Vladimir Putin has real credibility problems. And we know that, although we'd like to be friends with the Russian people, we're not particularly in a position to be friendly with President Putin.

So those are things we know. Now, exactly the motivations and what intelligence experts have learned on a classified basis perhaps will come out over time.

COSTELLO: OK. Well, you know, there are a lot of Senators on both sides of the aisle who are disturbed by President-elect Trump's, I don't know, apparent support of what Julian Assange is saying because, as you said, he's an unsavory character.

The Democratic Senator Tim Kaine was on "NEW DAY" this morning. He said he's appalled that Mr. Trump believes Julian Assange, who, by the way, is a suspected rapist, over America's 17 intelligence services. Kaine also intimated -- well, I'll let you hear for yourself. Listen.

(BEGIN VIDEO CLIP)

SEN. TIM KAINE (D), MINNESOTA: There is something very unusual, indeed even sort of suspicious, about the degree to which he casually kicks aside the intelligence community when he won't even go to the briefings, and again and again takes the Assange-Vladimir Putin line on this important question. Any President of the United States should want to protect American electoral systems from invasion or attack by a foreign government. And President-elect Trump should want to do that, too.

CAMEROTA: And when you say suspicious, what do you mean?

KAINE: I don't know. But we're going to get to the bottom of it.

(END VIDEO CLIP)

COSTELLO: OK. So Senator Kaine also intimated that Mr. Trump urged the Russians to do cyber espionage against Hillary Clinton during the campaign. So what do you suppose Tim Kaine meant when he said this is suspicious behavior on the part of Donald Trump?

WICKER: I think the operative words on the part of my friend, Senator Kaine, were, "I don't know." And perhaps we'll know more after the hearing. The classified briefing will be tomorrow to the President of the United States. Mr. Clapper's report is not yet even complete, and I think, at the appropriate time, the President will hear, at the code word level, what these people have to tell him.

Here is what I object to, and I think here is what the President-elect objects to. There's really no allegation that the Russians interfered with the voting process. The votes were the votes, and I happen to know. You know, I've been all around my state since the election. I think the American people knew who they meant to vote for, and they were not influenced by something that Vladimir Putin --

COSTELLO: Oh, no, but, sir, that's not what the --

WICKER: -- may have done or tried to do to influence the election.

COSTELLO: But, sir, it's my understanding that that's not what the intelligence agencies are saying. They're not saying that anybody hacked into, like, the actual voting machines and affected the way people voted. They're saying --

WICKER: Well, I want to -- I'm glad for you to say that.

COSTELLO: They're saying that Russia hacked into the DNC and they say that they allowed this information, the secret information from Democratic sources, to become public in order to sway the American public to vote a certain way.

[09:10:07] WICKER: And I think it's important for you to keep saying that as a member of the press, that there was no hacking of the election machinery.

COSTELLO: Yes.

WICKER: Also, I think it's very clear that there was an attempt to hack both the Republican Party and the Democratic Party. It was a little easier to hack into a lot of the Democratic sources. But the allegation is wrong to be out there --

COSTELLO: But it's still wrong, though, isn't it? It's still wrong?

WICKER: -- that somehow --

COSTELLO: Isn't it still wrong on the part of the Russians to try to meddle in any way in our elections?

WICKER: It is wrong and I -- absolutely, it's wrong for the Russians to be hacking any of our private conversations. I said that last week when the sanctions were announced. I expressed my approval of the Obama administration's announcements, and I said I only wished that he had been stronger against Mr. Putin's regime over time.

COSTELLO: Interestingly enough, President-elect Trump was up early tweeting again, and he tweeted about Julian Assange because a lot of people are just wondering why the President-elect is taking Julian Assange at his word. This is what Donald Trump tweeted out this morning.

He said, "The dishonest media likes saying I'm in agreement with Julian Assange -- wrong. I simply state what he states, it is for the people to make up their own minds as to the truth. The media lies to make it look like I'm against 'intelligence,'" and he put it in quotes again, "when, in fact, I am a big fan." But that sort of contradicts earlier tweets by Donald Trump when he

said, "The intelligence briefing on so-called Russian hacking was delayed until Friday. Perhaps more time needed to build a case. Very strange." In this tweet from January 4th, "Julian Assange said a 14- year-old could have hacked Podesta. Why was DNC so careless? Also said Russians did not give him info."

So is the President-elect all over the map here and what exactly is he trying to impart to the American people through this series of tweets?

COSTELLO: Also, well, you've asked a lot of questions there. I'm glad that the President-elect has expressed the same reservations that I have about the credibility of Mr. Assange. And so to the extent that he has been accused in the media of assigning a lot of credibility to Julian Assange, I think the President was trying to clear that up in that tweet.

Frankly, I had not read it until you just read it to me. But to the extent that he's making that point, I applaud that and I agree with Mr. Trump.

COSTELLO: All right. Senator Roger Wicker, thanks for being with many me this morning. And of course, the Senate hearing will start at any moment now. We're expecting it to start and we're expecting to hear testimony from the top intelligence officials in the United States about the Russian hacking into the U.S. election. Senator John McCain will lead the charge. His opening remarks should be quite interesting. Of course, we'll take them live.

Also to come in the NEWSROOM, get ready for a knockdown, drag-out fight on Obamacare. Is bipartisanship on life support?

(COMMERCIAL BREAK)

[09:16:39] COSTELLO: President Obama has a message for Congress as he prepares to leave office. It's time to take a page from the tea party playbook by blocking Republican plans with good old-fashioned obstructionist tactics. It's what voters hated most about Congress, gridlock, each side appearing to dig in unwilling to work with the other.

With me now to talk about this is William Hoagland, senior vice president with the Bipartisan Policy Center and Ron Brownstein, CNN political analyst and senior editor at "The Atlantic." Welcome to both of you.

COSTELLO: Good morning. So William, your organization is called the Bipartisan Policy Center. Do you see any of that bipartisanship happening with the 115th Congress?

HOAGLAND: I have to be optimistic and think that eventually we'll get around to bipartisanship because there's no way you can do Health Care Reform in the long-term, whether it be making amendments to it or not. It will have to be done in a bipartisan nature because of the nature of the membership of the United States Senate. It just has to be eventually something that will have to be done on a bipartisan basis.

COSTELLO: Yeah. But just because you say it has to be doesn't mean it will be, right?

HOAGLAND: Well, if we do repeal the legislation, which I think would be done on a partisan basis under the reconciliation process that's now under way in the United States Senate. That can be done with a 51-vote majority. The difficulty will be that when you start to come back with the replacement to it, to do the replacement, it cannot really be done in the reconciliation process. That, therefore, would require 60 votes in the Senate. That's why I think that in the long- term you're eventually going to have to look at this in a bipartisan manner.

Once you've repealed now it -- obviously the real problem here is get repeal without the replacement right now means at some point along the line you'll have to have a replacement. And that's when you'll have to come back to bipartisanship.

COSTELLO: Exactly. But Ron, the Republicans say they're going to repeal Obamacare. The Democrats say, "Hey, if you repeal Obamacare, you come up with a replacement plan.

BROWNSTEIN: Right. It's kind of the Colin Powell rule, applied to legislation. The Pottery Barn rule we called, if you break it, you own it. If Republicans repeal Obamacare on a vote with unified or nearly unified opposition from Democrats, it's hard to see why Democrats will feel a lot of obligation or ownership of helping them to replace it with something that they believe will be less comprehensive than what they removed in the first place.

I think the prospects for significant Democratic buy-in on an Obamacare replacement, if it is repealed on a completely partisan basis seem to be very limited. The one asset Donald Trump has going for him in trying to encourage more Democratic buy-in, is you do have ten Democratic senators in 2018 up in states that voted for Donald Trump.

HOAGLAND: Right.

BROWNSTEIN: Many of them in those midwestern Rust Belt States. But the structural problem he's got is that he's going to come into office facing a higher level of disapproval among voters in any other party that any incoming president party ever by far and that pushes Democrats in the other direction.

COSTELLO: And the other complication here is -- oh, go ahead add what you want and then I'll ask my next question.

HOAGLAND: Well, I just want to make it clear that in terms of any kind of a repealed legislation that might be adopted here at some time in January or February, we're only not repealing the legislation in terms of the major provisions as it relates to coverage out there. Most of those particular provisions as it relates to coverage will continue. Those people who are receiving coverage in 2017 will continue to receive coverage in 2017 and most likely all the way into 2018.

[09:20:05] But to Ron's point, when we get to 2018 when we have about 25 Democratic senators up and only about ten Republicans, and a lot of them coming from very red states, that's when I think the possibility for coming together on some sort of a bipartisan basis come to into fruition.

COSTELLO: The other twist here -- and I do want to get into this because I do want to talk about gridlock and bipartisanship. Donald Trump is not a Republican in the traditional sense, right?

HOAGLAND: Correct. Correct.

COSTELLO: The Republicans in Congress largely Republicans in the traditional sense. So that also might put a halt to the type of legislation that goes through Congress and eventually makes it to the president's desk.

BROWNSTEIN: Well, I look at it, you know -- Bill knows a lot more about health care and about the Senate than almost anybody. But the one thing I would caution in terms of the coverage being extended or the delay -- the repeal being delayed is that, once you announce you are repealing, there is the risk of disrupting the insurance markets even then and creating kind of a spiral that makes premiums unaffordable and coverage less available.

But to your point, look, Donald Trump in many ways was an independent who ran under the Republican banner. And I kind of look at this as two Venn diagrams. You have the agenda that Republicans have been developing in Congress since 2010. You have the other agenda that Donald Trump ran on. And where those Venn diagrams overlap I think on cutting taxes, rolling back regulation, repealing Obamacare, you could see a lot of action probably in a very partisan manner because much of that can be done through the reconciliation tool that Bill mentioned.

On the other hand, where one side or the other is often in a different direction, for example, the Republicans have put a lot of emphasis on restructuring medicare and converting anything to a premium support or vouchers and something that Donald Trump has been cool to. That's where we don't know where things are going to go. On the other side, you can see trade where Donald Trump is much more interested in imposing tariffs than most Republicans in Congress have been. We don't know where that is going to go. But I think on the core overlap, you could see a lot of rapid movement and not a lot of Democratic buy-in.

COSTELLO: Right. I guess my underlying point is, just because you have a Republican-lead House and a Republican-lead Senate and a Republican in the White House, doesn't necessarily mean the government will now run as a well-oiled machine, does it Bill?

HOAGLAND: Absolutely. I think the one thing we already know about to Health Care Reform as experienced over the last six or seven years is that Health Care Reform is very, very messy. It's easy in a campaign to have so veneering about Health Care Reform repealing was it's very, very difficult to legislate in this particular area. So this is going to be very messy.

The unfortunate situation from my perspective is that there are many other issues that Congress should be dealing with, in terms of infrastructure, in terms of tax reform, trade and other issues. And then -- and by going this direction that the Republicans are going in terms of the repeal here early, we may still be talking about Health Care Reform for the next two to three years when other issues should be are pressing on the Congress to act.

BROWNSTEIN: Carol, real quick. I mean, you know, the 20 million people who have gained coverage under Obamacare, they are not all Democrats. As I point out in my column this morning, if you look in fact that the five midwestern, the Rust Belt States that decided this election, places like, Iowa, Michigan, Ohio, Wisconsin, Pennsylvania and all of those states, more non-college whites gained coverage than college whites and minorities combined. And those were the absolute foundation of the Trump coalition.

So you're talking about removing coverage from voters over centralist coalition. And more subtly, many of the insurance reforms in the Affordable Care Act had the affect of lowering health care prices for older and sicker consumers and kind of shifting some of cost to younger and healthier consumers. If you repeal all those as well, you'll be rising costs on older, you know, older people and with greater health needs.

And again, a majority of Donald Trump's votes came from whites over 45. So kind of shifting more costs to those voters, those consumers may not be exactly what they had in mind for Health Care Reform.

COSTELLO: It will be an interesting journey, won't it? Ron Brownstein, William Hoagland, thanks so much for joining me this morning.

Next week is a big week on CNN. Monday night at 9:00 eastern, former democratic presidential candidate, Senator Bernie Sanders will sit down with Chris Cuomo for a town hall to discuss the Democratic strategy during the Trump administration. Then one week from tonight, Speaker Paul Ryan joins Jake Tapper for a CNN town hall. He'll take questions from a live audience ahead of the inauguration, that's next Thursday night, January 12th, 9:00 eastern, right here on CNN.

Still to come in the NEWSROOM, as they face attacks from their next commander-in-chief, top intelligence officials are ready to testifying on Capitol Hill. We are there for you.

But first, the opening bell just moments away. Let's head to the New York Stock Exchange and talk with Alison Kosik. Hey, Alison, I'm sure you were down there at Wall Street, but I'm glad to see your face.

ALISON KOSIK, CNNMONEY BUSINESS CORRESPONDENT: Good morning. Glad to see you as well, Carol. [09:24:58] You know, there is a one-day sale at Macy's today. All the stock you want at about 10 percent off. That's how much shares are down after the company announced it's going to be layoff 10,000 employees and close 68 stores this year, so that leaves 660 locations left of Macy's across the U.S.

Now, retail experts say Macy's may have to cut even deeper for a serious turn-around. The department store is doing all of this because Macy's had a really tough years, struggling against this counters and fast fashion competitors like H&M plus holiday sales were weak.

In the meantime we are expecting a plot opening here on Wall Street. But Dow 20,000 watch is back, the average now just sitting 58 points away from the milestone following some solid gains that we've seen so far this week. Some of the optimism coming from the Federal Reserve, minutes from its last meeting show policy makers discussing President- elect Trump's economic proposals and a possible path to quicker interest rate hikes this year.

Also, I'm seeing a lot of optimism about how companies performed in the fourth quarter, the October through December period of last year. So there are high expectations as fourth quarter earnings come out next week, Carol.

COSTELLO: All right, Alison Kosik, thanks for keeping an eye on things for us. I'll be right back.

(COMMERCIAL BREAK)

COSTELLO: And good morning. I'm Carol Costello. Thank you so much for joining me.

Let's head straight to Capitol Hill, shall we? In just moments top intelligence officials will testify in front of the Senate Armed Services Committee. They'll face tough questions about their conclusions that Russia meddled in the U.S. elections, finding that President-elect Donald Trump isn't exactly buying into. Trump will be briefed tomorrow by the way on that intelligence. Mr. Obama will be briefed today. And the public will be briefed officially on Monday.

We'll be monitoring these hearings. We expect an opening statement to come any moment now from Senator John McCain who is leading this hearing. And fireworks expected. So it should be quite interesting.

Should we go to our panel right now while we wait for the event to start? OK. So joining me right now Frederik Pleitgen, CNN senior international correspondent he is in Moscow. Evan Perez is CNN's justice correspondent. Barbara Starr is CNN's Pentagon correspondent. Nia-Malika Henderson is CNN senior political reporter. And Mike Baker, he's a former CIA covert operations officer. Welcome to all of you.

All right, so we see Senator John McCain preparing for his opening remarks. I got to pause, guys. He's starting. Let's listen. SEN. JOHN MCCAIN (R), ARIZONA: I want to welcome all our members back to the committee and extend a special welcome to the new members joining us. On the Republican side we're joined by Senator Perdue and senator Sasse. On the Democrat side we are joined by Senator Warren and Senator Peters.

[09:30:04] It's a special privilege to serve on this committee, most of all because it affords us the opportunity to spend so much time in the company of heroes, the men and women who serve and sacrifice on our behalf every day.